HOUSINGNEWSREPORT
MY TAK E
WHERE HAS THE RESIDENTIAL REAL ESTATE INVENTORY GONE? BY MICHAEL MAHON PRESIDENT, FIRST TEAM REAL ESTATE
As we approach the fourth quarter of
purchase across the diverse markets of
their introductory economics courses,
2017, consumers, real estate agents,
the United States. This amount reflected
residential housing inventory in low
and real estate brokers are in search of
an inventory 9 percent lower than July
supply means housing prices continue
answers to the same question; “where
2016 (2.11 million), and highlights an
to escalate to settle the appetite of
has the available residential real estate
available residential inventory in decline
consumer demand.
inventory gone?”
and contraction, year over year, for 26 consecutive months.”
“The median existing-home price for all housing types in July 2017 was
According to housing statistics released by the National Association of Realtors,
Straight out of textbooks of universities
$258,300, up 6.2 percent from July
“at the end of July 2017, there were
across the country, providing education
2016 ($243,200). July’s price increase
1.92 million existing homes available for
of the laws of supply and demand within
CONTINUED ON NEXT PAGE
JULY 2017 | ATTOM DATA SOLUTIONS
10
HOUSINGNEWSREPORT
MY TAK E
AGE OF HOUSING STOCKS: 2005 VS 2015 2005
seeing properties attracting multiple
2015
offers immediately upon going on the market, adding to the emotional tension
40%
of buyers looking to make a home 35%
purchase, and further driving price
30%
increases across many markets.
25%
As homeowners stay in homes longer,
20%
we are seeing our national housing inventory increase in average age.
15%
This trend is due to the lack of
10%
introduction of new home starts to mitigate the pent-up demand of
5%
buyers in the housing industry.
0% 45 years old or more
35-45
25-35
15-25
5-15
5 years old or less
Source: National Association of Homebuilders
According to a study conducted by the National Association of Home Builders (see chart on left), “The share of housing stock built 45 years ago or
As homeowners stay in homes longer, we are seeing our national housing inventory increase in average age. This trend is due to the lack of introduction of new home starts to mitigate the pent-up demand of buyers in the housing industry.”
earlier increased significantly from 32 percent in 2005 to 38 percent in 2015. However, the share of new construction built within the past 5 years declined to 3 percent in 2015, compared to 9 percent in 2005.” As our housing inventory across the country ages, so too does the costs
marks the 65th straight month of year-
in Huntington Beach are leveraging
of deferred home maintenance,
over-year gains,” as further reflected
their relationships and brokerage’s
particularly impacting homeowners
in recent reports of the National
market share of available listings in
living on fixed retirement incomes and
Association of Realtors.
neighborhoods to identify potential
homeowners getting low returns on
home sellers months in advance of
fixed savings accounts -- all contributing
The symptoms of higher sales prices
those potential sellers placing their
factors to why homeowners are
across U.S. markets, as well as a low
homes on the market.
residing in homes longer.
sellers’ choices as to what they could
Real estate professionals like Campbell
“For first-time home buyers”, said
purchase if they sold their home, are
are also leveraging their list of a pent-up
Valerie Neeley of First Team Real Estate
two critical factors causing homeowners
demand of buyers to often place
in Mission Viejo, California, “down
to stay in their homes longer.
the home under contract without having
payment resources are limited, due to
supply of listing inventory limiting
to inconvenience sellers with a multitude
home buyers’ outstanding student loan
Real Estate professionals such as Lily
of showings. Additionally, because of
debts, as well as employer’s inability to
Campbell of First Team Real Estate
this same pent-up demand, we are
CONTINUED ON NEXT PAGE
JULY 2017 | ATTOM DATA SOLUTIONS
11
HOUSINGNEWSREPORT
MY TAK E
compensate employees at increasing
“Down payment assistance programs,
years, compared to homes built prior
rates that would keep up with the rate
grant programs for inner city housing,
to 1969 owned by householders with a
of increased housing costs.”
and government-backed FHA and VA
median age of 58.”
financing are fast becoming the vogue With an inability to purchase, the pool
methods of financing in assisting first-
These statistics imply a growing market
of potential first-time homebuyers
time home buyers, as well as veterans,“
for renovations for older homeowners
continues to add to the demand for
said Neeley. “So long as real estate
who can afford the cost of renovations
rental housing in many communities,
agents can find the inventory.”
to stay in place, and also show that
thus increasing the prices of rents
younger home buyers are electing to
being paid by consumers while also
According to a 2015 ACS study of the
purchase newer inventory homes, likely
taxing the ability of these potential
National Association of Homebuilders
at least in part to avoid the added costs
first-time homebuyers to save for
(see chart below), “homeowners with
of deferred home maintenance that
down payments.
higher family incomes tend to live in
comes with older homes.
the newer residential units. In 2015, The increased pricing in rental housing
the average household income for
While increasing prices have caused
also motivates institutional investors
owner-occupied homes built after 2010
many homeowners to remain in homes
to retain their investments in
was $ 121,577, which was higher than
longer, there is one sector of the
residential housing across the country,
the $86,328 average family income
market that has seen improvement
maintaining the largest inventory of
for those living in homes built before
in increasing inventory and sold
investor-owned residential housing
1969. Moreover, younger homeowners
transactions. The national luxury
our country has ever experienced, and
are more likely to live in newer homes.
housing sector has experienced an
limiting residential inventory available
Homes built after 2010 are headed by
increase in available inventory as
for purchase.
homeowners with a median age of 44
CONTINUED ON NEXT PAGE
WHO IS OCCUPYING DIFFERENT HOUSING STOCK? HOUSING INCOME (LEFT AXIS)
With an inability to purchase, the pool of potential first-time homebuyers continues to add to the demand of rental housing in many communities, thus increasing the prices of rents being paid by consumers while also taxing the ability of these potential first-time homebuyers to save for down payments.”
AGE OF HOUSING HEAD (RIGHT AXIS
70
140,000
120,000
58
59
57
55
60
50 100,000
44
50
80,000
40
60,000
30
40,000
20
20,000
10
0
0 1969 or earlier
1970 to 1979
1980 to 1989
1990 to 1999
2000 to 2009
2010 or later
JULY 2017 | ATTOM DATA SOLUTIONS
12
HOUSINGNEWSREPORT
MY TAK E
demand has stabilized and a slight
level employees, as well as conforming
moderate overall increases in unit
decline in pricing has reduced average
loan limits being raised to $625,500
transactions, and flat in overall pricing
days on market to 162 days, as
earlier in the year,2017 has been the
volume. Jobs…Jobs…Jobs…is where the
evidenced by the recently released
year of the consumer within the luxury
answer lies, and if this becomes the
August 2017 luxury housing report
marketplace,” Clegg added.
reality for our U.S. economy in 2018, all
published by the Institute for Luxury Home Marketing.
bets will be on a robust housing market In close, the market is today as the
to close out this decade.
market was yesterday, and as it will be “The coastal luxury homes market of
tomorrow. Our markets are the result
Southern California has been strong
of supply and demand. As we prepare
over the course of this summer,“ states
for 2018, increasing jobs across the
Jody Clegg of First Team Real Estate in
country, improving lending restrictions
Huntington Beach, California. “Luxury
of the past decade, reduction in
home sellers have experienced an
overall income tax rates, increasing
As president of First Team Real Estate, the
increased demand for their homes due
opportunities of down payment
16th largest volume brokerage in the country,
to increasing consumer confidence in
assistance, and greater deferment
the economy, increasing jobs in mid- to
of student loan debt, are all external
senior-level employment positions, as
factors that can and will fuel growth of
well as an ability to cash in on awesome
listing inventory and opportunity across
returns from the stock market.
the U.S. housing market.
MICHAEL MAHON
Michael Mahon operates with the mentality that relationships are the driving force behind every successful real estate brokerage in the industry, and is honored to support the organization’s 1,735 sales associates throughout California markets. Mahon has more than 26 years of comprehensive real
“Couple these positives with the fact
Without changes in any of these
that luxury home sellers have a larger
such factors, growth across the U.S.
inventory to choose from, increased
housing market will likely remain stable
relocation opportunities for senior
to positive for the coming year, with
estate experience spanning the residential and commercial sectors.
JULY 2017 | ATTOM DATA SOLUTIONS
13